SK Corp. to Expand
Presence in Overseas
Exploration
Strives to become a new major in the Asia-
Pacific area by boosting petroleum products
SK Corp. has stepped on the gas to explore overseas markets under its so-called "blue-ocean strategy,"aimed at creating new markets.
The nation's largest oil refinery is placing priority on expanding its overseas business arena. The petroleum refining industry has so far been defined as an industrial field based on domestic demand.
As part of efforts to shift its focus to the overseas markets, SK Corp. is in negotiations to take over Hyundai Oil Refinery after the company was designated as the preferred bidder for the sale of the oil refinery. SK Corp. plans to export all petroleum products from Hyundai Oil Refinery to China. To this end, SK Corp. will be required to invest 1 trillion won to upgrade facilities designed to produce light oil products instead of heavy oil products.
The planned acquisition of Hyundai Oil Refinery is in line with SK Corp.'s strategy to seize China as a bridge head for making its global foray. If and when SK Corp. takes over Hyundai Oil Refinery, SK Corp. will be able to churn out refined petroleum products surpassing 1 million barrels per day to rank it 4th largest oil major in Asia and 17th globally.
SK officials see that their company's acquisition of Hyundai Oil Refinery would raise the oil refinery's refining capacity to 1.11 million barrels daily, so it would afford the company the leverage to negotiate in deals on large-size development and investment projects as well as to have more favorable conditions in negotiating strategic alliance with global majors.
Overseas oil exploration is considered to be a high-risk, high-return business arena, but newcomers find it difficult to enter the market, dominated exclusively by global majors. It is requisite to make SK Corp. bigger so that it can compete with or collaborate with global majors in acquiring stakes of oil exploration projects and forging strategic alliance.
SK Corp. has so far poured $1.3 billion in investing into overseas oil exploration projects, with almost all of the fund having been retrieved. Besides, the oil refinery company owns mining stakes equivalent to crude oil of 300 million barrels. The company has set aside 160 billion won for overseas oil exploration during this year.
SK Corp. officials predict that the oil refinery will take a 50 percent share in Korea's own crude oil development target of producing 1 billion barrels by 2010.
Recently, SK Corp. confirmed the commercial feasibility of its new oil well in the BM-C-8 mining block in Brazil and the oil field estimated is presumed to have reserves of over 50 million barrels. The company said it has a 40 percent stake in the oil well. so 20 million barrels of oil from the well belongs to the company.
The offshore mining block is located 250 km from Rio de Janeiro. SK has been engaged in the work to explore the oil field since 2000 when it took over 60 percent stake in Devon Energy, a U.S. wildcat oil company.
The two oil explorer companies, after drawing up a contract, launched the oil exploration to find that the offshore oil field has some 50 million barrels of crude oil in reserves.
Since the inauguration of Chairman Chey Tae-won, the company further strengthened its energy development sector to become a new energy company in the Asia-Pacific area, which led to the successful development of oil wells in Vietnam, Peru and Brazil, he said.
The company expects further discovery of oil in other mining blocks in the Latin American country, especially those new mining blocks signed when President Roh Moo-hyun visited Brazil in November, last year including BM-C-30 and 32, with Devon Energy of the United States.
SK Corp. as the biggest oil exploration firm in Korea, has been engaged in oil exploration in 53 projects in 23 countries starting with the Karimoon block in Indonesia in 1983. Currently, the company is undertaking the exploration and production of oil and gas in 19 blocks in 11 countries, securing 300 million barrels of crude oil equivalent to 40 percent of oil consumed in the country a year, pumping up 24,000 barrels of oil per day from its own oil wells overseas. nw

SK Crop. said on Oct. 19 it has begun to explore an oil block, Iberia North in southern Louisiana, the United States. The refinery? U.S. subsidiary, SK E&P, bought a 70 percent stake in the block.